Power, Diversity, and the SP200 List

As some of you may know, I’ve been assisting Stefan Swanepoel with a project called SP200, the second annual edition of which just went live. SP stands for “Swanepoel Power”, so the actual list is the list of the 200 most powerful individuals in the residential real estate industry.

Since I haven’t shown this post to Stefan or anyone else, and this is my personal blog, everything that follows is my personal opinion only.

Recently, an interesting little debate broke out on Facebook about the list, when Leigh Brown, a REALTOR and coach, posted this:

The resulting debate and comments were, and remain, fascinating, interesting, and important. Nonetheless, I thought it might be useful to at least provide a peek behind the scenes as Stefan, I, and others spent weeks and months debating the list, debating the criteria, and ranking individuals.

To be sure, the most important debate happened last year, when we put the first edition of the Power 200 list together. Because it was then that we spent countless hours on the phone and via email debating the central concept of the list: “powerful”. What is “power”? What do we mean by that? How would the list and the rankings change if we changed our assumptions about what “power” means?

Defining Power

The place to start, perhaps, is the end: where we ended up after all the debate and back and forth. From the SP200 website:

Power is an elusive concept. Merriam-Webster dictionary defines it as “the ability or right to control people or things.” Of course, that raises the question of what is meant by “control.” Control is defined as directing the behavior of, or to cause a person to do what you want. Power can also exist even though it may not be exercised, because simply having power can discourage others from challenging it. So you could just imagine the healthy debate we had as to what criteria should be used in creating a list of the most powerful people.

I stand by that definition of power. But that description did end up leaving out our “working concept” as we put the list together.

Power, as we defined it for the SP200, is the “ability to make things happen” or “ability to get things done”. I know that’s not exactly the most precise definition either, but it does get closer to what we were attempting to achieve.

Does Person X have the ability, on his or her own say-so, to make things happen? (Or, alternatively, to prevent things from happening?) From this working concept, we ended up distinguishing what we meant by “power” from various other important concepts.

For example, “power” is different from “influence”. When Richard Smith, CEO of Realogy and the most powerful person in real estate for the second year in a row, tells Alex Perriello, CEO of Realogy Franchise Group, to do something, that isn’t a suggestion, or an attempt to influence Alex. That’s an order, and Alex can either follow it, or find a different job, and Richard will find someone else who will carry out that order. That’s way different from influence. To take just one example, no one would deny that Brad Inman, publisher of Inman News, is extraordinarily influential and powerful. But Brad cannot force a wholesale change of policies at BHHS like Gino Blefari can. He can persuade, but cannot order, Harold Crye to do X or not do Y. (In fact, no one can order Harold Crye to do anything at all….)

Power is different from visibility. Some of the people on the SP200 keep an extremely low personal profiles. Great examples are Bruce Zipf, CEO of NRT, and Lloyd Frink, the Co-Founder and Vice-Chairman of Zillow. They’re not on Twitter every day, nor are they giving speeches left, right and center. Many people even within the industry don’t know who they are. But as we have learned in our research, ask anyone in their respective organizations, and they’ll tell you that those two men have enormous power: the ability to make things happen.

Having power is not the same thing as being innovative. Oftentimes, power is exercised through preventing change (another word for “innovation”). It might be super “innovative” for HUD to impose a 30% down payment requirement for all home purchases, but people like Dale Stinton and Jerry Giovaniello have the power to prevent such “innovation”. Indeed, power can be and often is inherently conservative, as it seeks to preserve the status quo that creates the power in the first place.

Power is not merit. Let me restate that as it may be the most misunderstood thing about the Power 200 list: Power is not Merit. We make no judgments on individuals, except in terms of their power — the ability to get things done. This isn’t about someone’s achievement, or hard work, or value; it’s simply about the ability to make things happen. This isn’t about personal traits, except as they pertain to power. We do not ask and do not care whether an individual is a great friend and listener, kind to animals and babies, or is a horrible boss who throws things at their employees and doesn’t tip enough at restaurants. We don’t care.

There may be dozens or hundreds of individuals who deserve recognition for their achievements and influence. The SP200 is not that list. There may be people on the list who just fell into their positions and did absolutely nothing to deserve power. We don’t much care; we only care about whether that individual actually has the ability to make things happen.

Frankly, if the SP200 is to have any value whatsoever, if our work is to be worth anything at all, we have to not care about those things to be as fair, as neutral, and as objective as possible.

Inexact Science

Given that working definition of “power”, when Stefan and I put the SP200 together last year and this year, we ended up taking into account all sorts of variables. From the website:

We did however try to make it as much science as possible by taking into account theses types of data points as well as the financial resources of the company or organization, the organization’s significance and contribution to the industry, the company’s geographic reach, the individual’s personal influence, his/her tenure in the industry, the office he or she holds, the decision-making power of said office, report lines, ownership and activities during the past year as well as future growth, and potential.

So for example, we think that someone who owns a company has more decision-making authority than someone who is hired to be the CEO on behalf of shareholders. But perhaps the #2 person at a large national company has more “power” (ability to get things done) than the #1 person at a smaller regional brokerage, simply because of the financial resources and the geographic reach of the national company. Maybe a consultant who has the ear of major national company executives has more ability to make things happen than the owner of a large brokerage in one city. Maybe he doesn’t; it depends on a whole lot of factors.

This was not and will never be an exact science, and we end up often trying to compare not just apples to oranges, but apples to orangutans. We’ve spent countless hours rearranging rankings, debating inclusion or exclusion, and some of our more memorable questions went something like this:

“Yes, his company has more agents, but she has more Twitter followers and speaks at more conferences.”

“Her company makes less money than his, but she sits on this board and that council.”

“Yeah, but can he really make that decision without clearing it with his Board of Directors? My guy can.”

That’s not even in the same universe in some respects, and yet, we were ultimately trying to measure the ability to “make things happen”. The power to get things done, or prevent things from getting done.

Answering Some Specific Questions

With that background, let me try to answer a few specific questions that have been raised both in Leigh’s thread and in emails and messages to Stefan and myself.

Where are actual producing agents?

We actually considered this at some length. At an individual level, there isn’t a single producing agent in the U.S. who has sufficient ability to make things happen or prevent things from happening in his/her capacity as an agent. We considered some people who lead enormous super-teams, doing hundreds or even thousands of transactions and utterly dominating their local markets.

Furthermore, great producing agents provide top-notch service to their buyer and seller clients, set an example to others, and make a lot of money. They should be celebrated and appreciated, of course. But what power, what ability to make things happen industry-wide, or to prevent things from happening industry-wide, do they have?

I’m willing to be corrected, but we didn’t see it based on our definition of power.

Where are the women?

This is a puzzling, although perfectly understandable, question. It seems in our day and age that there’s always a controversy if some group or another is “under-represented” in any sort of list or rankings or what-have-you.

Speaking as an Asian-American, and one that has often noted that the only American industry whiter than real estate is the NHL, let me suggest that the issue isn’t the list, or Stefan’s work, or our analysis. The issue is simply the reality of the residential real estate industry as it is in 2014. If you’re outraged that more than 32 women didn’t make the Power 200 list, imagine how it might feel to be African-American or Latino or Asian-American or gay.

At the same time, a list that bent over backwards and compromised its own framework for analysis for the sake of “diversity” is offensive in and of itself. I know I wouldn’t want to be named to any list simply because I’m Asian. (I’ll make an exception for the Sexiest Asian Men in Real Estate list….) I seriously doubt that any female executive with the accomplishments, achievements, and the power to make the Power 200 list would want to be named to it because she’s a woman, and we needed to fill some sort of diversity quota.

We put 32 women on the Power 200 list because they are powerful individuals, not because they’re powerful women. Should the American real estate industry change and every single powerful executive ends up being black lesbians in wheelchairs, the entire SP200 would be comprised of black lesbians in wheelchairs.

I wouldn’t have it any other way for putting the list together. If you would, I’d like to know why.

I would, of course, want to see changes within the real estate industry itself such that there are more women, Asian-Americans, African-Americans, LGBTQ, Muslims, Hindus, Zoroastrians, handicapped, etc. among the ranks of the powerful. All I can do, of course, is pledge not to turn down the job as CEO of NAR if/when it is offered to me. (I won’t be holding my breath waiting for that call.)

Why Did You Leave Out Person X?

Despite being extraordinarily gifted and hardworking, not to mention handsome and sweet-smelling, Stefan and I are not, as it turns out, omniscient. 🙂 We’d love to know whom we may have overlooked. Please send all of those suggestions and oversights to SP200 for next year’s edition.

Why Did You Do This?

I can’t speak for Stefan or anyone else on the team on this, but I did it because it was really, really fun. And challenging.

But one thing I do hope that SP200 provides is a list of people you need to know if you seek change and reform in the real estate industry. If you’re a brilliant technology startup and you need to know who has the ability to get things done, the power to make things happen, I think this is the list for you. If you’re a REALTOR concerned about some deep issue in the industry, the SP200 is a great starting point for the people you need to talk to and convince.

Anyhow, hope this peek behind the scenes, into our thinking and debates, helps provide at least some context for the SP200.

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.